Developing IT-enabled Innovation Capabilities: A Dynamic Capabilities Approach

Abstract

With innovation-based competition gaining increased significance over the past few years, a central question for researchers is how Information Technology (IT) can help firms strengthen their innovative capability. To address this question, the present study empirically explores the relationship between ITenabled dynamic capabilities and a firm’s innovative capabilities. Survey data from 322 international firms is analyzed by means of Partial Least Squares Structural Equation Modeling (PLS-SEM). Outcomes indicate that IT-enabled dynamic capabilities have a significant impact on both a firms’ incremental and radical innovative capability. By performing split-group analyses, differences are observed between young and established firms regarding the underlying IT-enabled routines that help strengthen their innovative capabilities. Results suggest that young firms present a stronger dependency on IT-enabled capabilities compared to established firms.